CFTC Derivatives Limits

I am forever amused by Washington's half-hearted and weak attempts to "regulate" various aspects of the financial markets. All of the approaches they are taking or attempting to take are weak and useless and easy to circumvent.

Most amusing is when a company like Goldman Sachs says out of one side of their mouth that they support limiting exposure to commodities contracts to speculators and at the same time out of the other side of their mouth they are saying, "We are the exception because of our unique offerings and the need to be able to have unlimited access and exposure to 'protect ourselves' against the exposures we offer to our clients.

There is nothing Goldman would like better than to limit other's exposure so they can have even more power in the market place. Goldman is nothing but a big gambling house. Look at the "products" they offer regularly. They are like, "I will pay you X amount of money if you buy this "contract" and the value of the underlying "asset" or "index" increases or decreases in value over Y amount of time". They limit ones gains but not losses. They also "protect" themselves against losses with derivatives.

There is NO limit to the amount of these types of products they can and do offer. This is only one example of how Goldman "creates" products based on underlying derivatives and commodities and indexes and hedges themselves against losses.

There is no legitimate reason for these products to exist. Goldman simply games the market. They use the billions they earn with massive leverage in the derivative markets to buy real assets where they control and monitor the output of the various commodities they are trading. They own directly or indirectly all types of commodity storage facilities, distribution facilities and outright production.

Goldman and Morgan Stanley should be immediately stripped of their bank holding status they were granted during the financial crises (along with Cap One, American Express, State Street and a host of other non retail bank finance companies as well as forced to repay all government guaranteed debt outstanding at artificially low government backed interest rates. They are fast back to their old formulas of risk taking and gambling.

The CFTC is NOT the agency to be doing piecemeal regulation. The financial industry needs total overhaul and total regulation and we desperately need a return to the Glass-Spiegel Act days of separating retail banking from insurance from investment banking etc. We need total regulation of the hedge fund industry and we need to come up with completely new ways to deal with the way in which the financial industry has learned to game the entire market with technology, leverage and control.